The 2009 EIA Energy Conference: Day 2

Energy and the Media

This was the panel I had been asked to participate in. My fellow panelists were Steven Mufson (one of my favorite mainstream energy reporters), from the Washington Post; Eric Pooley from Harvard, (the former managing editor of Fortune); and Barbara Hagenbaugh from USA Today. The panel was moderated by John Anderson of Resources for the Future.

I can only imagine that a number of people looked at the lineup, looked at my inclusion, and thought "What's that guy doing up there?" So here's the background on that. When I was working at the ConocoPhillips Refinery in Billings, Montana, we followed the weekly release of the EIA's Weekly Petroleum Status Report very closely. We included this information in a weekly supply/demand report, and it helped us to make decisions on how to run the refinery for the upcoming week.

When I started my blog, I began to follow and report on the weekly inventory release, which happens on Wednesday mornings and is followed in the afternoon by This Week in Petroleum. Professor Goose liked the weekly reports and asked me to bring them over here to The Oil Drum. This all helped drive more traffic to the EIA website, and helped more people come to appreciate the value of the EIA data.

Doug MacIntyre, at that time the primary author of This Week In Petroleum, started commenting occasionally on my blog, and was quick to answer any questions that readers had. Over time I corresponded with several people at the EIA, and they invited me up to the conference last year. The timing didn't work out last year as I was in the Netherlands, but this year's conference was doable. So that's how I ended up on a panel with the mainstream media.

The panel consisted of us all sitting around a table and taking questions from John, and eventually the audience. I will mostly report on what I said, because it was pretty difficult to take notes while sitting around the table.

The first question was on the price run-up last summer, and whether the media coverage was adequate. We all had somewhat different answers on this, but I took the opportunity to point out that the weekly inventory data can be an important predictor of prices. The plunging gasoline inventory data was the basis of my predictions for $3 and $4 gasoline in the Spring of 2007 and 2008 respectively (which we did in fact see). The other thing I pointed out about this issue is that Google searches on "rising oil/gas prices" probably drive more first-time traffic to my blog than anything else. (Searches for the "water car" are also quite popular).

Next John asked about phony, or false balance in reporting. Before the panel, I had asked readers at my blog and at The Oil Drum for suggestions on topics to cover, and false balance was mentioned by several readers. An example one reader gave was "Scientists report that the earth is round - Flat Earth Institute objects..." So how much credibility do you afford different sides of the debate?

The others on the panel agreed that this was a problem. I made two observations. One, it isn't always easy to figure out which side is the Flat Earth Institute. I spend a lot of time trying to figure that out at times, especially over newly announced technologies. Second, the good reporters do a lot of research when they are reporting on a story so they can determine who is credible. I noted that Steve Mufson had interviewed me by phone in 2005, and all that came from that hour-long interview was a partial quote in the story. At the time I was annoyed, but later on I came to understand that Mufson was just doing a lot of homework to get the story. Most of his questions were designed to figure out if I knew what I was talking about. The people you have to watch are the ones who call for just a quote.

As an example of false balance, I talked about Brazilian ethanol. Dan Rather and Frank Sesno have both been guilty on their Brazilian ethanol reporting. In hindsight, perhaps their reporting wasn't false balance so much as completely unbalanced, and lacking any semblance of critical reporting. They both essentially reported the Brazilian ethanol story as "They did it. We can be just like them." I went on to explain a bit more about the truth of Brazil's energy independence miracle, which I will update in an upcoming essay (but is also covered in my ASPO presentation from last September (Biofuels: Facts and Fallacies).

There was more discussion about scale (e.g., biofuel versus petroleum usage) and the role bloggers are playing now with respect to reporting news (some specialist bloggers can provide a technical analysis that the mainstream media may lack; on the other hand they don't always write to journalistic standards). I know I am forgetting some topics, but ultimately John started to take questions.

There were some good questions, but also some instances where the questioner simply wanted to make a point. Morgan Downey asked what energy books I liked. I told him that I was about 250 pages into his book, Oil 101, and that it was a fantastic book. I also mentioned Twilight in the Desert as an influential book on me. I noted that while I had some issues with Twilight, I thought it did a great job of driving home the importance of Saudi Arabia in the world oil picture, and just how important it is that we understand what's going on there. Finally, I mentioned Gusher of Lies as a book I had really enjoyed.

I was asked about peak oil and the notion that we are running out of oil. I took the opportunity to clarify that peak oil does not mean we are running out of oil - but the media often misconstrues the issue in this manner. I said that we would still have oil in 100 years. Peak oil means that we can't get it out of the ground fast enough to meet demand, and that if the production peak is near that we are facing some difficult years. (Other than this question and my answer, there was scarce mention of peak oil during the conference).

A representative from (I believe) the California Independent Petroleum Association got up and made a statement that he felt that despite the important role the industry plays, they are being demonized and singled out for punitive taxes. I responded that I could empathize; that one of my greatest concerns is that we will discourage domestic oil and gas production, and then biofuels fail to deliver per expectations. In that case I think we become even more dependent upon OPEC.

Fellow panelist Eric Pooley disagreed and said we need even stronger incentives for moving away from oil. That really misses the point I was making, though. You can have the strongest incentives in the world, but they can't assure that technology breakthroughs will occur. So while you are promoting one industry at the expense of another, very successful industry that plays a critical role in the world, what is the contingency plan if the incentives don't pay off? As far as I can see our contingency will be to go, hat in hand to oil exporters and plead for more oil. (The last thing we will do is ask people to make do with less).

I was asked about how I come up with ideas for what to write. I said that I browse the news headlines on energy every morning, and that I have Google news alerts on topics like "energy", "oil prices", and "peak oil." (Hat tip to Leanan for that bit of advice about a year ago). If something strikes me as particularly interesting - or particularly wrong - then I may write something about it.

After the panel, a number of people came up and introduced themselves. Some thanked me for speaking up on behalf of the oil and gas industry. One audience member asked me why I don't write more about "the global warming scam." As I said to him "I am not touching that with a 10-foot pole." He asked why, and I said 1). I am not an expert; 2). Discussions over the issue always seem to degenerate into name-calling. I will repeat my position on this. Coming from a science background, I have a healthy respect for scientific consensus in areas where I don't have specific expertise. On the other hand, the issue has become so polarized that people who do try to discuss the science are frequently shouted down and called names. I don't endorse those sorts of tactics, no matter how correct you think you might be.

Investing in Oil and Natural Gas - Opportunities and Barriers

Once again, there were two sessions going on simultaneously that I wanted to see. I had to miss Greenhouse Gas Emissions: What's Next? But I have been a big fan of Deutsche Bank's Paul Sankey for several years, and I wasn't about to miss his panel. Sankey has testified before Congress several times on the oil and gas markets, and I often feel like he is the only one there who knows what he is talking about. (I formerly summarized one of his appearances in Gouging is an Idiotic Explanation). Joining Sankey on the panel were Susan Farrell of PFC Energy, John Felmy of the American Petroleum Institute, and Michelle Foss of the University of Texas. The moderator was Bruce Bawks of the EIA.

The panel agreed that $50 was about the average cost of oil production today, suggesting that prices are unlikely to fall below that level for long. Farrell commented that worldwide expenditures on exploration and production amounted to $500 billion in 2008. She also noted that oil companies have been unable to arrest the decline rate; that it is in fact increasing. I believe it was also Farrell who suggested that in 2010 the haves would acquire more of the 'have-nots.' Someone on the panel stated that the global supply crunch still exists.

I think it was Felmy who said that even if we make a large scale move to hybrids or electric vehicles, 50% of the world's lithium reserves are in Bolivia. So we may end up trading Chavez for Evo Morales. I don't know; I think I would make that trade.

As always, Sankey made a lot of interesting comments. He said that while the banks might make a lot of money in a cap and trade system, intellectually it didn't seem like a good idea to him. He said he preferred a direct carbon tax. He said that we are setting up a slingshot for prices right now, but "2010 could be a bloodbath." He also said that the overall policy imperative of the new administration seems to be "anything but oil", but he believes that "attacking the oil and gas industry will be incredibly harmful to the U.S. economy."

Other Sankey zingers:

"Alaska would rate as one of the 'countries' most hostile to the U.S. oil industry."

"I am not sure there is any equity in any bank in the U.S."

"If we stopped producing gold tomorrow, we have 100 years of supply in inventory. If we stopped producing oil tomorrow, we have 55 days in inventory."

Finally, someone on the panel (I think it was Sankey) recommended the book Oil on the Brain as providing great insight into the industry. The author, Lisa Margonelli, had a pretty typical view of the industry until she delved deeply into the supply chain, traveling to Iran, Nigeria, Chad, and Venezuela. I have not read the book, but will put it on my reading list.

Thus ends my recollections of the conference. As I said in the previous entry, this is not so much a detailed account of everything as it is just my own observations and things that stuck with me as interesting, odd, etc. If you spot something that you think is in error, please let me know. For me, this was an interesting experience, and one that I was glad to be a part of. In conclusion, I want to thank the good people at the EIA for inviting me.

Previous Entries

Energy Secretary Steven Chu's comments

The 2009 EIA Energy Conference: Day 1

I found Robert's comments in the Energy and the Media panel, and even some of the other comments made by the panel, to be a refreshing change to the overwhelming optimism we heard on so many panels at the conference. The panel followed the usual format of this conference of sitting around a table and talking, with no slides, which made it more difficult to take notes.

Eric Pooley made the point that it is difficult to get the idea of the scale of the problem across to readers. For example, each of Socolow's stabilization wedges represent a huge undertaking.

One point that was made --I am not certain by whom--was that it is important for those writing about the energy story to contact reporters directly, and explain things the reporters may not be aware of. One should be careful as to how one approaches reporters. "There is a detail you may have overlooked" is likely to get a better response than "You are all wrong."

Robert, thanks for the report.

I tremendously respect your work, and I too in the past have punted instead of directly answering a question but I don't do that any more. The stakes are simply too high now. A simple statement of where you are on the topic of climate change might have made a difference to someone in the audience. We need each respected person out there to speak up regarding climate change and peak oil.

For instance, if this is in fact your position, you could have said, "I've done enough personal research that I'm comfortable saying that climate change is happening and we had better start preparing for it; I don't think it's a scam at all." That's what I would have said.

I doubt very much that name-calling would have occurred in that setting.

Again, thank you for the report and for taking time out of your schedule to add your voice to the panel.

Agreed with aangel. Robert, from your discussion above, I got the distinct impression that your position is that of a committed doubter on climate change. Clarity and simplicity are good things.

I got the distinct impression that your position is that of a committed doubter on climate change.

Others have read it exactly the opposite way, which is the way it should be read. I accept scientific consensus unless I have a particular expertise in an area that would cause me to doubt the consensus. Here, that is not the case. And as I pointed out to people on my blog, I really don't have enough time to delve deeply into this to even have a really informed debate on the topic. So, I apply the same standard I have for other areas, such as the germ theory of disease: What is the scientific consensus?

Robert, As a published (albeit never paid) scientist myself, I wish I shared your confidence in scientific "consensus". I've seen too many cases where it is the exact opposite of the factual truth, not just Lysenkoism but also for instance the myth of a disease called AIDS being caused by a supposed virus called HIV, not to mention the trotting out of the hollow dogmas that autism is still an unexplained mystery and has not really increased tenfold.

I do strongly agree with your choice of fence-sitting on questions you have not studied in depth. I don't think the AGW controversy need be one of them though, as it looks to me to fall into a category of what I call pseudocontroversy (p32 of my book To become sufficiently expert you don't need to get a doctorate in climateology; you need merely to examine the assertions of the doubters, and then check whether they hold water. For instance the argument that there's been cooling in the last few years.

Indeed there is little merit in anyone just saying "Yes I'm yet another authority figure agreeing with x". But read up the not very complexities of this important pseudocontroversy, and then you can answer inquiries by saying you have yet to see a credible case against AGW presented anywhere.

"Robin Clarke is one of those rare souls"--
--Bernard Rimland

I've seen too many cases where it is the exact opposite of the factual truth,

While there are certainly cases - and they get a lot of publicity - what percentage of the total do you think this amounts to? Personally, I think that the scientific consensus is correct in the overwhelming majority of cases, but there are certainly famous cases (the cause of ulcers is my favorite) that might lead one to believe that the scientific consensus is often wrong. Flip through a chemistry or physics textbook and look for case studies. You will find that they are rare.

You could be generally right about physics and chemistry (though my expertise to comment thereon stops at A-level). It's fields of more immediate practical/political/commercial/emotional importance that seem to be more associated with pseudo-scientific consensuses. Especially a lot of medicine. Lysenkoism is another case in point (and could overhyped permaculture become a new Lysenkoism?).
Denial of Climate Catastrophe falls well into the concept of clashing with strong status-quo interests. Another factor in false consensus is self-servingness of professional researchers. One way this manifests is refusal to acknowledge the solution of a problem (e.g. that most autism is now easily curable, or my explanation of what it is), as that puts all the researchers out of their jobs. Another way it manifests is as a new pseudo-paradigm in bogus justification of a huge new rich seam of employment for researchers. Two instances are the aforementioned AIDS/HIV hoax, and the beta-amyloid-based search for a cure for Alzheimers (AD). This flies in the face of the fact that the amyloid plaques are far less correlated with dementia than are the tau tangles, just if you bogusly define AD in terms of amyloid, then like wow all your research will correlate with it. This enormous pseudo-research enterprise also flies in the face of another of my studiously-ignored explanations, of why dementia cannot be cured (except by bolting on extra memory modules)

In addition to the instances mentioned in my reply just above, the case of twice-Nobel-Prizewinner Linus Pauling deserves a mention. On the web you can find his review of evidence of vitamin C preventing or curing the common cold. Even though it is the work of the Nobel author of much of the modern chemistry textbook, it can easily be understood by anyone of teenager-level science. Its conclusion is far from fence-sitting. And yet you can rest assured that the professional "scientific consensus" is that this great genius somehow became a crackpot nutter in respect of this and ditto his great book about vit C curing cancer. Billion-dollar industries do not like uncorruptable geniuses pointing out how to bypass their profits with cheapo natural products. The "scientific consensus" is almost always the funded "scientific consensus".

the myth of a disease called AIDS being caused by a supposed virus called HIV

Educate yourself.

A friend's wife is doing basic research aimed at finding a vaccine for HIV. To suggest that she's either too ignorant to know what she's doing or is involved in a massive and lethal fraud is highly insulting and deeply ignorant.

Perhaps that's why she's a paid scientist and you're not; she's willing to put evidence before opinion.

Robert -

He said that we are setting up a slingshot for prices right now, but "2010 could be a bloodbath."

I'm not sure of the point he was trying to make. Is he saying we're pushing up prices now but there will be a big collapse come 2010? Or is the bloodbath even higher prices come 2010?

You mentioned your Petrobras stake the other day... I was on the verge of buying a few oil stocks but seem to have missed the low low prices. I still think it's a good idea, I'm just waiting for a dip. But we should, according to the guy above, be ready for a bloodbath?


I almost wrote that I was also a bit confused by the bloodbath comment. But what I think he was saying is that we may not have hit the bottom yet (although it appears that we are well off the bottom at this point).

My concern with cap-and-trade is that the exchange system will be run by the same financial experts who have brought us where we are today, whose interest in carbon conservation ranks behind an interest in making money. Tied to that is a concern that many of the offset projects funded with emissions-traded revenue won't contribute to a genuine reduction in carbon emissions. Heading Out recently described what looks to me like one example, where farmers in North Dakota are receiving carbon offset money for projects they might undertake anyway.

I agree with Paul Sankey that a carbon tax is preferable to cap-and-trade but it may cut out too many avenues for profit along the way for conservative governments to prefer it. However, I sleep easier knowing that some of our best policy minds think we can have both a carbon tax and cap-and-trade (pdf) at the same time. Not that they have the details, of course.

"I think it was Felmy who said that even if we make a large scale move to hybrids or electric vehicles, 50% of the world's lithium reserves are in Bolivia. So we may end up trading Chavez for Evo Morales. I don't know; I think I would make that trade."

Since transportation in the US requires nearly 75% of the petroleum products consumed by the economy, the need for reduced gasoline use is imperative. The problem for electric or PHEV is not just that Bolivia (and Chile) have such a huge amount of the "economically recoverable" lithium reserves. A similar problem will be to get enough Cobalt or Manganese for making the Lithium salts used in Lithium-ion batteries. At any rate I cannot see more than 10% of the world's soon to be 10 billion cars and light trucks using electric or hybrid powered if L-I batteries are used.

Better solution is to go with electric trains running on wind, solar, hydro and using pumped storage. These are likely energy resources in US west where sun shines and wind blows so much near mountainous areas. Travel across New Mexico, Colorado, Arizona, southern Utah, and west Texas and you can see great locations for such renewable energy and storage of the same.

Another problem with Li-ion cars is that, apart from being very heavy, the batteries spectacularly explode in the event of a fire (such as a car-crash). That's what I heard on the bbc yesterday at least. Some people in Japan are working on some other battery that supposedly will be a lot less heavy and explosive. Sorry I can't remember details but the UK health authorities still work to the "scientific consensus" that I'm not really being poisoned by the mercury in my mouth.

Another problem with Li-ion cars is that, apart from being very heavy, the batteries spectacularly explode in the event of a fire (such as a car-crash).

Keep in mind that gasoline cars have a well-documented history of explosion risk. It's not all that clear why batteries would be more dangerous than gallons of gasoline. The amount of energy involved is far lower (a fully-charged EV battery has 50kWh, which is the energy equivalent of just 1.5 gallons of gasoline), and it should be much simpler to engineer safety systems around non-moving solid objects than around a constantly-circulating fluid.

You're making a claim that you don't have nearly enough evidence to back up. You're stating as fact something that has never actually happened. Moreover, you're thinking of thermal runaway, which has caused some laptop batteries to burst into flames. That's got nothing to do with external shock (like a car crash), and is generally a problem with faulty manufacturing rather than external heat.

EDIT: it seems like the battery chemistries which are being considered for the Volt are intrinsically safer, and material properties (such as cells that tear rather than exploding under pressure) are being used to lower risk.

I think the informal law of unintended consequences always remains a consideration. Someone has to point out potential risks otherwise they might not get considered. A designer might add something to the the electro-chemistry to make it more safe but then it might not be as efficient. These are all things that go into optimization trade-offs.

Regarding the "Oil on the Brain" book, some of it is pretty "crude":

---- ---

This is an excerpt from the book describing her visit to the NYMEX.

Just reporting the facts.